Early-Cycle Properties Hit Sales Block Again
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A lot of deals that were bought early in the cycle are retuning to market, says Transwestern SVP Ed Cummins (here with his kids in Crested Butte, Colo.). Take Pebble Brook, an 810-unit property in southwest Houston that Ed’s marketing. It was bought distressed a few years ago, and the owner renovated and and stabilized the project to 96% occupancy, turning a nice profit. It’s closing in September to a new buyer, who plans to upgrade it further. Ed says putting $2,000 to $3,000/unit into renovations can raise rents $50/month or more. If you’re willing to do a major upgrade, you can even bump rates a couple hundred dollars.
Ed’s also close to putting a 160-unit project in Bear Creek under contract. It’ll get a major renovation that’ll bring it from low $0.90s/SF rent to high $1.10s. In addition, the team recently closed Park at Cedar Lawn—192 units in Galveston—that received a major renovation in 2011. And Ed’s in best and finals on La Mirage (pictured), a 312-unit community in West Houston. It’s been owned by the seller for 20 years and is well-maintained, but hasn’t been upgraded. Ed projects it can get a $0.20/SF rent boost with some renovating.